Estate of Evelyn M. McMorris - Page 3




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          McMorris as her conservator, entered into an agreement with NW,             
          through Jerry McMorris as president, to redeem the 13.409091                
          shares of NW stock in exchange for $29,500,000, payable over                
          120 months with interest at 10 percent.                                     
               The Federal estate tax return (the estate tax return) for              
          decedent's estate was filed on December 4, 1991.  The estate tax            
          return reflected deductions for decedent's 1991 Federal and                 
          Colorado income tax liabilities of $3,960,525 and $641,222,                 
          respectively.  Decedent's Federal income tax return for 1991 (the           
          1991 Federal income tax return) was filed timely on or before               
          April 15, 1992.  The 1991 Federal income tax return reflected an            
          income tax liability of $3,681,703, which amount was paid with              
          the return.  Decedent's Colorado income tax return for 1991 also            
          was filed timely on or before April 15, 1992, and reflected an              
          income tax liability of $639,826, which was paid with the return.           
               A large part of the income reported on decedent's 1991                 
          income tax returns resulted from gains on the redemptions of NW             
          stock that were passed through to decedent's 1991 income tax                
          returns from the fiduciary income tax return for Mr. McMorris's             
          estate for the fiscal year ended March 31, 1991.  The NW stock              
          had been included on Mr. McMorris' estate tax return at an                  
          appraised value of $1,726,562.50 per share.  Accordingly,                   
          decedent's basis in the NW stock was determined using the value             
          of $1,726,562.50 per share, and substantial gain resulted.  After           





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